Best Practices for Leveraging Startups in Corporate Innovation

BOSTON & BOULDER, CO – Innovation Leader today released a new survey sponsored by Techstars, the worldwide network that helps entrepreneurs succeed, which shares how executives at large corporations are approaching engagements with startups and other disruptors to fuel corporate growth.

The survey, Startup Engagement: Best Practices for Large Organizations combined quantitative data from 115 large organizations with 15 qualitative interviews to reveal ways that corporations currently engage with startups, and sheds light on best practices for companies looking to leverage startups to drive internal innovation.

While some startups are determined to go it alone, motivated by the disruption of established industries, others are eager to partner with large organizations for mentorship and advice, joint product development, access to markets, funding, and the potential of a large equity event in the form of an acquisition.

Survey research found that large corporations range in their experience and willingness to work with startup entities. Of the five percent of corporations with the highest level of experience with startup engagement, research found that providing mentorship, sponsorship and participation was at a much higher rate (88 percent) than corporations with less experience (57 percent). More experienced corporations are also more likely to partner with startups to co-develop new products (79 percent) than corporations with fewer startup touch-points (51 percent). More experienced companies are also more likely to participate in university startup programs (85 percent) when compared to less experienced corporations (45 percent).

But many companies have not put a game plan in place to connect to their startup ecosystems. In fact, the survey found that 19 percent of corporates said they haven’t yet established goals for startup engagement; 47 percent haven’t defined a clear “point of contact” internally who will be responsible for startup interactions; and 38 percent of corporates don’t yet have metrics in place to track the impact of their startup engagement activities.

“Our experience tells us that it’s not a question of if this disruption will occur, but when,” says David Brown, founder and co-CEO of Techstars. “We saw a way to turn this situation into a win-win. For a large corporation, the best path to true innovation—cultural change as well as problem-solving and avoiding disruption—is to partner with startups. We realized that if we could bring together the corporations that were the most willing to innovate with the top technology startups that have the deepest domain expertise, both would benefit.”

The research suggests that large corporations with the most startup interaction are more willing to work with startups across every category of engagement, including corporate VC investment, running a startup-focused technology accelerator, acquiring startup technology, becoming an early customer of startup products and services or reselling their technology to their customers. Willingness to work alongside startups creates mutually beneficial circumstances for both the startup and the corporation.

The research also shows that more experienced companies were similar in their approach to their goals for working alongside startups. All companies said the top goal was running pilot tests or proof-of-concept tests for new ideas, followed by “driving internal transformation” by using startup tools and methodologies, and to better understanding customer or tech trends. Just 29 percent said they were hunting for potential acquisitions.

“We met over the last four years with 1,500-plus startup founders around the world and asked them what would make a great corporate startup partnership. Everything we designed kept their input in mind,” says Danielle Cohn, Executive Director for Entrepreneurial Engagement, Comcast NBCUniversal and one of the interviewees featured in the Innovation Leader report. “At the conclusion of our first accelerator class, seven of the 10 companies were doing some form of a partnership with Comcast NBCUniversal businesses, including two that have entered into master services agreements with our company.”

In addition to the research results and interviews with corporate leaders, the Innovation Leader report includes a roadmap for corporations looking to work with startups — from establishing a strategy to identifying the people who will be involved to assessing progress. For more information, download the full report.

Innovation Leader is a fast-growing media and events company with a laser focus on helping the world’s largest companies build their competitive advantage. Since 2013, Innovation Leader has built the largest network of corporate innovation, strategy, and R&D executives in both public and private companies, helping these executives to strengthen their innovation programs; connect with useful resources, solutions, and vendors; and engage with peers inside innovative labs and workplaces around the globe. For more information about Innovation Leader membership and events, visit www.innovationleader.com or follow us on Twitter, LinkedIn and Facebook.